The Market Is Not Out to Get You
Stockscores.com Perspectives for the week ending November 28, 2012
| Lose Your Mind and Trade Well |
The Mindless Investor
New book from Stockscores founder Tyler Bollhorn
Coming Soon!
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In this week's issue:
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Stockscores Market Minutes Video
I think the market is capable of making a major rally but not until the uncertainty in the US with their upcoming tax increases and spending cuts are solved. In this week's Market Minutes video, I highlight what to look for in the charts. You can watch it by clicking here. To receive email alerts any time I upload a new video, subscribe to the Stockscores channel at www.youtube.com/stockscoresdotcom.
This week's Trading Lesson
From The Mindless Investor, The Market is Not Out to Get You
To say that the market has been tumultuous in the new millennium is an understatement. Investors have endured massive sell-offs and then watched incredibly stable multiyear upward trends that seemed to defy logic. Stock market sectors that were once uncorrelated with others now trade in unison, giving the investor few means to escape weakness. Well-established stocks once considered to be blue chip have fallen dramatically, while companies with little in the way of earnings have enjoyed astronomical gains. It has not been a market that made sense.
By being difficult to understand, the stock market has become the scapegoat for all of the economic problems in the world. So many people associate the financial crisis with the stock market, although it was really leverage and greed that were to blame. When people watch their net worth rapidly decline, and when that net worth is wrapped up in the stock market, they're bound to have some animosity.
The contrepreneurs of the world have often been involved in the markets. Bad people doing bad things catch a lot of attention, especially when the numbers are immense. Bernie Madoff is just one person, and yet he was able to record a staggering fraud that was based in stock market investing. Put a few of these people in the news on a regular basis and pretty soon we have people camping out in public parks in protest.
We should be reminded that the stock market, like money, is not evil. As Ayn Rand wrote in Atlas Shrugged:
So you think that money is the root of all evil? . . . Have you ever asked what is the root of money? Money is a tool of exchange, which can't exist unless there are goods produced and men able to produce them. Money is the material shape of the principle that men who wish to deal with one another must deal by trade and give value for value. Money is not the tool of the moochers, who claim your product by tears, or of the looters, who take it from you by force. Money is made possible only by the men who produce. Is this what you consider evil? - Atlas Shrugged
It's the people who can be evil, and the excesses of our past have brought out their actions. The stock market is not rigged; it's just a place where people make their trades. Problems arise when bad people with considerable financial power have used the market and people's greed to their advantage.
Just as the market doesn't care about me, it also doesn't care about you. It's not out to get you; it's simply a facility for people to buy and sell assets at a price that each party deems to be fair. The buyer thinks the stock is going up; the seller thinks the stock is going down. One of them will be wrong. The market itself has no influence on who gets to win.
The stock market allows innovators and leaders to finance the products and services that will add value to our lives. Whether it's a drug that will cure the disease you're going to get or a gadget that will tell you the best wine to pair with your tenderloin, the market is the engine of our economy. We just have to learn how to run it.
People who suffer a loss tend to look for someone to blame. This is a futile endeavour. Even if there is someone that deserves blame, little benefit will come to you from placing fault at someone else's feet. You can only improve your situation if you take responsibility for everything that happens to you. Only you can make the changes that will alter the direction your life is taking. You control your destiny, financial or otherwise.
Stop blaming Wall Street, Main Street and Government Street for the pain you feel. Evolve your approach to the market so that you have a better chance of living on Easy Street.
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Chart patterns that predict upward trends are often characterized by abnormal breaks through resistance from periods of low price volatility, typically from a period of rising bottoms. The Stockscores Simple Strategy and Market Scan combines the Sentiment and Signal Stockscores with other Market Scan filters to find these chart pattern set ups. The result is a scan that will generate a good number of high probability position trading opportunities each week.
I ran the scan today and found one decent candidate.
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1. FSLR
FSLR is breaking out from an ascending triangle pattern that has been building for the past couple of months. Strong as long as it can hold above support at $22.50.
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References
Get the Stockscore on any of over 20,000 North American stocks.
Background on the theories used by Stockscores.
Strategies that can help you find new opportunities.
Scan the market using extensive filter criteria.
Build a portfolio of stocks and view a slide show of their charts.
See which sectors are leading the market, and their components.
Disclaimer
This is not an investment advisory, and should not be used to make
investment decisions. Information in Stockscores Perspectives is often
opinionated and should be considered for information purposes only. No
stock exchange anywhere has approved or disapproved of the information
contained herein. There is no express or implied solicitation to buy or
sell securities. The writers and editors of Perspectives may have positions
in the stocks discussed above and may trade in the stocks mentioned. Don't
consider buying or selling any stock without conducting your own due diligence.
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